Vulgar Economy-TSS (part 5)

Xxxx Xxxxxx xxxxxxxxxx at xxxxxxxxxxxxx.xxx
Thu Mar 1 20:00:46 MST 2001


Vulgar Economy-TSS (part 5)


        In line with the methodological outlook of the classicals, Marx
conceived of prices of production as long-period centers of gravitation,
around which market prices fluctuate (1894: 178, 181).  Non-equilibrium
Marxism, however, dismisses the analysis of long-period coordinating
tendencies as an ideological exercise, on the ground that what we
observe are discoordination, structural change and crisis, rather than
static positions of central gravitation.  The conception of theory that
underlies this view is astonishingly naïve.

        Theory aims to expose the regularities that underlie observed reality.
It does this by abstracting from the countless random and transitory
impulses that affect the actual values of the variables we wish to
explain.  Owing to such accidental causes, the magnitudes determined by
a theory cannot be expected to coincide exactly with the actual
magnitudes observed in the market.  If a theory is sound, the deviations
between actual and theoretical magnitudes will tend to counterbalance
one another over time, so that the averages of the observed magnitudes
will be close to those established by the theory: a theory's usefulness
is gauged by how accurately it depicts the tendential mechanisms that
operate on the phenomena we observe (see Garegnani 1990: 45-49, for a
more thorough discussion of this point).
This methodological principle is evident throughout Marx's discussion of
the equalization of profit rates in Capital, Vol. III:

        If prices of commodities in one sphere are below or above price of
production (wherein we deliberately leave aside the fluctuations
attendant upon the various phases of the industrial cycle in each and
every enterprise) the balance is effected through the expansion or
curtailment of production … caused by inflow or outflow of capital to
and from individual spheres of production.  It is by this equalisation
of the average market-prices of commodities to prices of production that
deviations of specific rates of profit from the general, or average,
rate of profit are corrected….  If perceptible at all, this process is
so only in the fluctuations and equalisations of market-prices of
commodities to prices of production, not as a direct fixation of the
average profit (1894: 367; emphasis added).

[Deviations of market-prices from prices of production] mutually balance
one another, so that in the course of certain longer periods the average
market-prices equal the prices of production (1894: 356).

        Thus for Marx the divergence of actual magnitudes from neat formal
results does not invalidate those results, since a theoretical
proposition manifests itself "in reality only in approximation and with
a thousand modifications" (1894: 184).   Naples (1996: 96), perhaps
inadvertently, supports this interpretation when she observes that "In
Volume III of Capital, Marx … abstracted from the actual absence of a
uniform profit rate, and … from those real conditions he considered
inessential in order to throw into relief the underlying structure of
capitalism."  She neglects to explain, why Marx is entitled to engage in
abstractions, while Sraffa is not - even when they utilize the same
abstraction!

        Non-equilibrium Marxism appears, in the light of what has just been
said, to be a peculiar variant of what Marx called vulgar economy - a
body of propositions that mistakes superficial appearances for the
fundamental social relations that underpin capitalism.  In stark
contrast to classical political economy, which "since the time of W.
Petty has investigated the real relations of production in bourgeois
society, … vulgar economy … deals with appearances only, ruminates
without ceasing on the materials long since provided by scientific
economy, and there seeks plausible explanations of the most obtrusive
phenomena…" (Marx 1883: 81).  As Marx remarked to Ludwig Kugelmann in a
letter of July 11, 1868,

        The vulgar economist has not the slightest idea that the actual,
everyday exchange relations and the value magnitudes cannot be directly
identical….  What is reasonable and necessary by nature asserts itself
only as a blindly operating average.  The vulgar economist thinks he has
made a great discovery when, faced with the disclosure of the intrinsic
interconnection, he insists that things look different in appearance.
In fact, he prides himself in his clinging to appearances and believing
them to be the ultimate.  Why then have science at all? (Marx and Engels
1868-70: 69).

        Marx regarded classical political economy as a scientific project
(albeit one that was flawed in important respects); vulgar economy he
dismissed as ideology masquerading as science.  As the passages
reproduced above suggest, he believed that classical political economy
was able to penetrate surface appearances because, among other things,
it utilized the long-period method.  His method was incompatible with
the simplistic literalism of the view that theories of long-period
gravitation cannot tell us anything about actual economic processed
because the economy never settles into an equilibrium.

--
Xxxx Xxxxx Xxxxxx
Ph.D Student
Department of Political Science
SUNY at Albany
Nelson A. Rockefeller College
135 Western Ave.; Milne 102
Albany, NY 12222





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